Will legislators legalize kids’ lemonade stands this week?

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Temperatures are expected to hit 90 degrees in much of New Hampshire this week. The state’s largest school district closed Monday on account of the heat. Other school districts are letting out early. What will kids be doing? Some of them are sure to set up lemonade stands. Technically, that would be illegal in many communities unless the children obtain a permit first.

It’s not that communities specifically target kids’ lemonade stands. It’s that municipal ordinances that require permits to sell food or drinks typically don’t contain exemptions for children. 

In other states, police have been called to shut down unlicensed lemonade stands. Stories in recent years from Colorado, Texas and New York received national news coverage, which prompted legislators in New Hampshire and other states to propose laws exempting child-operated soft drink stands from local permit requirements.

House Bill 183 would do that in New Hampshire. It has passed the House and Senate in different forms and is back for consideration in the House, which meets on Thursday. 

The House version exempted people up to age 18 who sell soft drinks from municipal vendor permit requirements. 

The Senate version exempts people under the age of 14 who “are selling soft drinks on family owned or leased property.” 

(The “soft drink” language is intentionally broad enough to cover children who might sell apple cider, powdered sugary drinks, canned soda or other soft beverages instead of lemonade.)

Under the Senate amendment’s language, children selling lemonade on public property (say, at a sports field, basketball court or public park) would still have to obtain a permit if a municipality required one. 

Both the House and Senate versions of the bill met with strong opposition. In the House, 163 members voted against it. On the other side, 10 senators voted against it. 

A major argument against the bill was that no one could produce a case of police shutting down a child’s lemonade stand in the state. Therefore, it was argued, the bill isn’t needed. 

However, the lack of a publicized arrest lemonade or stand shut down does not mean that police interactions aren’t happening. It likely means that officers are exercising their discretion and letting legal infractions slide. 

Several years ago, the author of this story had a police officer stop at his child’s lemonade stand to ask if we had a permit (we didn’t) and to inform us that we probably needed one. But he didn’t order us to shut down the stand. 

The argument that police have not enforced the law is no defense of the law. Having permit requirements that no one intends to enforce is folly, not good governance. What’s the point of keeping broad and enforceable regulations if no one ever intends to enforce them? 

The obvious answer is that municipal officials intend to reserve the power to enforce these ordinances at their discretion should they encounter a situation in which they feel the need. In other words, they intend to enforce these ordinances selectively, rather than apply them uniformly. That is a recipe not only for sewing distrust of government, but also for biased policing.  

The New Hampshire Municipal Association in fact testified against HB 183 by simultaneously arguing that municipalities “are not going to try and regulate kids lemonade stands” and that municipalities would regulate the stands on a case-by-case basis “if kids are doing something that is unsafe and the police should be able to come along and ask them to move,” as described by the committee hearing transcript.

Keeping a broad ban on unlicensed lemonade stands in place on the off chance that police might one day need to tell kids to stop doing something unsafe (something unrelated to the sale of lemonade) offers an extremely weak case for keeping such bans in place. 

License and permit requirements often are drawn too broadly, and legislators legislators are taking notice. For example, it has long been a criminal offense for anyone to cut hair without a state license, even if doing it at home on one’s own friends and family members. 

Legislators recognized this problem (after the Josiah Bartlett Center pointed it out) and this year passed a bill to decriminalize unlicensed hair cutting that isn’t done for money. 

Local food vendor permit requirements often go too far as well, covering children who sell drinks from their own yards. 

House Bill 183 would prohibit these municipal food vendor permits from applying to minors under the age of 14 who sell soft drinks from property their family owns or leases. It is narrowly drawn so that it still allows municipalities to control vending on municipal property and when done by high school students. 

It is one of the bills House members could take up at their session on Thursday. It will be interesting to see if it continues to meet such strong opposition during this week’s heat wave. 

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Legislature votes to decriminalize home haircuts

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In April of 2020, when barber shops and hair salons were closed and people resorted to cutting each other’s hair, we pointed out that this was technically a criminal offense in New Hampshire. 

Barber and cosmetologist licensing is governed by state law, and those laws are written not only to protect public health, but also to protect barbers and cosmetologists from competition.

RSA 313-A:9, part of the chapter governing barber and cosmetologist licensing, states: 

“It shall be a class A misdemeanor for any natural person, and a felony for any other person, to engage in any practice regulated by this chapter without the appropriate license.”

To translate that into plain English: Any person who cuts hair without a license commits a misdemeanor, and any company that has its employees do so commits a felony.

That language is clear and unambiguous. It is a crime to cut hair — even a family member’s or your own — without a license. 

(It’s also illegal to give manicures and pedicures or apply makeup without a license, as those activities are defined in the statute as falling under the definition of cosmetology, the practice of which requires a state license.)

Yet when we pointed out the plain fact that the law criminalizes regular practices that people do for each other every day, some state representatives and journalists said we were wrong. We were accused of stoking fears, and of misrepresenting the law. 

A year later, the Legislature has acknowledged that the law does, in fact, make it a crime to cut hair without a license. 

And it has passed a bill to change that.

House Bill 606, introduced by Rep. Carol McGuire, R-Epsom, simply inserts “for remuneration” into RSA 313-A:9 so that it reads: 

“It shall be a class A misdemeanor for any natural person, and a felony for any other person, to engage for remuneration in any practice regulated by this chapter without the appropriate license.”

HB 606 passed the House 200-166 in April. No one testified against the bill in committee. On Thursday, May 27, the bill passed the Senate on the consent calendar, which means it was considered so non-controversial that it was passed with a slate of other bills by voice vote with no debate.

If the bill becomes law, as expected, it will remove an offensive and absurd criminal penalty from the books. But the criminal penalty for performing unlicensed hair cuts for pay remains.

And it remains a criminal offense to perform other services without a license. There are criminal penalties for the unlicensed appraisal of real estate, unlicensed auctioneering, unlicensed junk or scrap metal dealing, and the unlicensed sale of lightning rods. 

(Legislators passed a bill in April to remove the entire section requiring a license to sell lighting rods. Gov. Chris Sununu signed the bill, and it takes effect next January.)

Removing the criminal penalty for doing your family’s hair and makeup is long overdue. But it’s a small step. Unnecessary criminal penalties remain woven throughout New Hampshire’s occupational licensing laws. And unnecessary occupational licensing remains rampant in general. Much more work is needed to remove needless, anti-competitive and economically harmful occupational licensing requirements. 

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State replaces mandates with guidance — a year late

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On April 29, Gov. Chris Sununu announced that the state’s long list of mandated COVID-19 restrictions for various industries will expire on May 7, to be replaced by a Universal Best Practices Guidance.

This is a welcome and long overdue change, which the Josiah Bartlett Center for Public Policy advocated in our reopening guidelines on April 30th — of 2020. 

Almost exactly a year later, the state is finally switching from a set of strict mandates to a set of recommended best practices for all industries. 

As we wrote last April;

To slow the spread of the virus and avoid overwhelmed hospitals, it isn’t necessary for the state to dictate which industries get to stay open. It’s necessary only for people to behave in ways that suppress the spread.

Dividing businesses by industry and ordering whole sectors closed forces many businesses to shut down even though they could operate with minimal risk by adopting and enforcing effective mitigation practices. A better framework would be “safe” vs. “unsafe” practices.

Under a safe practices model, a business would risk closure only if it couldn’t enforce strict mitigation protocols such as social distancing, surface disinfecting, and mask wearing. There is no justification for closing a business that can enforce such protocols, regardless of its industry.

Rather than the governor dictating which industries can and can’t open, a safe practices model would encourage and reward responsible behavior, including the widespread adoption of rigorous safety protocols throughout the economy.

One important reason for preferring guidance to mandates is that COVID-19 is a new virus that did not come with a long history of study by researchers. Epidemiologists and other experts weren’t quite sure how best to slow the spread, as became obvious when numerous health organizations, government agencies and medical professionals offered different prescriptions for handling the virus. 

Organizations needed the flexibility to adapt to rapidly changing information and guidance. 

Mandated behaviors restrict that flexibility. And they can be extremely harmful when wrong. Just ask the families of the thousands of New York nursing home residents who died as a result of Gov. Andrew Cuomo’s order to move infected COVID-19 patients from hospitals to nursing homes. Or the millions of students (and their families) who suffered academic and financial losses because of schools that stayed closed long after it was clear they could reopen safely. 

Instead of ordering organizations to adopt rigid practices that might or might not work as intended, the state’s new guidance educates managers about basic best practices that can be adopted in multiple environments and situations. 

Even so, it fails to incorporate some of the latest research.

For instance, the guidance states that organizations should:

“Work to maintain a distance of at least 6 feet or more of physical separation between people or related groups when possible.”

Not only has the six-foot rule never been supported by a strong body of research proving its effectiveness (the World Health Organization has always recommended three feet, not six), a new MIT study concludes that it is largely useless and gives a false sense of security.

The study concludes that occupancy and time in a room are what matter, not distance, because the virus is carried on tiny air particles that circulate throughout an entire indoor space under normal ventilation scenarios. 

Using a school classroom with 19 students as a case study, the authors wrote:

“For normal occupancy and without masks, the safe time after an infected individual enters the classroom is 1.2 h for natural ventilation and 7.2 h with mechanical ventilation.”

By failing to incorporate the latest research, the state’s guidance could recommend practices that are not effective, while not informing managers of practices that are more effective. 

Because these are recommendations and not mandates, however, managers are free to adopt on their own initiative practices that are guided by newer research. 

The state’s switch from mandates to guidance is a good development. Had it come earlier, perhaps some of the economic damage from restrictions on businesses could have been avoided. 

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How N.H. hurts craft brewers — and consumers — to protect other businesses

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Allegedly, state alcohol regulations are justified by the need to protect the public. Yet many of the laws that prevent the growth and expansion of craft breweries in New Hampshire are not remotely related to public health or safety. Their one and only purpose is to protect other industries from competition. 

A bill to remove some wholly unnecessary craft brewery regulations shows how legislators intentionally handicap small businesses on behalf of more established industries.

Senate Bill 125 would make four changes to the state laws that regulate craft breweries. In each instance, the law that would be changed exists not to protect the public, but to protect restaurants, retailers, beer distributors or large breweries. (Note: Brewers are divided by law into nano breweries, brew pubs, and “beverage manufacturers.”)

1. State law prohibits New Hampshire beverage manufacturers (but not nano breweries or brew pubs) from selling more than a single 15.5 gallon keg “or the equivalent of one case of 12 ounce containers per person per day” directly to a member of the general public. 

You can walk into a supermarket or convenience store and fill your full-sized, carpeted 1970s van with as much beer as it can carry, and joyfully tap your fuzzy rear-view-mirror dice all the way back home to your sitar jam session. But it’s illegal to do exactly the same thing at a craft brewery that makes more than 2,000 barrels of beer a year. (The van might also be illegal, but that’s another topic.)

Imagine a nano brewery, a brew pub, a “beverage manufacturer” craft brewery, a convenience store and a supermarket lined up side by side on one city street. Right now you can stop at four of the five and buy as much beer as you want. But at the larger craft brewery, you can buy only one case of beer per trip.

What’s the point of this law? Obviously, it isn’t to protect the public from consuming too much beer. You can buy as much beer as you want at any licensed retailer other than a larger craft brewery. Its only purpose is to force consumers to buy beer at other retailers.

Nano breweries and brew pubs are exempt from this prohibition apparently because they were added to statutes later and the ban was either inadvertently or deliberately left out of their regulations.

SB 125 would strike the prohibition, allowing people to decide for themselves where to buy more than a single case of beer.

2. State law does not explicitly authorize New Hampshire breweries, nano breweries or brew pubs to ship their products directly to in-state consumers. However, the state allows out-of-state breweries and wineries to ship directly to New Hampshire residents. (Even then, it excludes nano breweries and brew pubs.)

As a result, Granite Staters who would like to order beer from home are banned by their own state from giving their business to local brewers. This harms consumers and in-state brewers — but helps beer retailers and distributors, as well as out-of-state brewers.

SB 125 would remove this prohibition and let all types of in-state brewers, as well as wineries, deliver straight to consumers.

3. State law further forbids New Hampshire breweries from opening their own stand-alone retail locations to sell beer directly to consumers. Again, there is no public health or safety justification for this law. People can buy beer by the full-size ‘70s van load from convenience stores, grocers and supermarkets.

The only possible reason for banning brewery-owned retail stores is to deny consumers an alternative to their local supermarket or convenience store (which are supplied by independent beer distributors).

SB 125 removes this prohibition and lets brewers set up their own retail outlets.

However, the bill uses the term “outlets,” which is plural. The New Hampshire Lodging and Restaurant Association and the New Hampshire Grocers Association have objected to this, saying the law should limit brewers to opening a single retail outlet.

In Tuesday’s meeting of the House Commerce and Consumer Affairs Committee, Rep. John Hunt, R-Ringe, assured the associations that the bill would be amended to limit brewers to a single retail outlet.

SB 125 also would seem to prohibit brewers from joining together to jointly open a retail outlet. N.H. Liquor Commission officials believe the bill prohibits partnered outlets, which means this is how the law would be enforced.

How this prohibition protects consumers is anyone’s guess. But it would increase costs for breweries and limit their retail options, further benefitting beer distributors and other beer retailers.

There is no discernible public interest in limiting brewers to a single retail outlet or prohibiting them from partnering with other brewers to open stores. Any such prohibition would exist solely to protect other businesses from competition — which, of course, would hurt consumers and brewers.

4. State law does not allow nano breweries (those that produce 2,000 or fewer barrels a year) or brew pubs (which produce 2,500 or fewer barrels a year) to hire another brewery to make beer for them.

This prohibition doesn’t reduce the amount of beer available to consumers. Grocery shelves are fully stocked with beer made outside New Hampshire. The effect of this law is to make it harder for New Hampshire’s smallest breweries to scale up, which benefits larger brewers.

SB 125 would remove this prohibition and allow brewers to enter into brewing contracts with each other. However, it comes with several restrictions.

It states that a “contract brewer shall not deliver beverages to on-premises and off-premises licensees within the state.” The small brewery could hire a larger brewery, but only to make the beer. Then the small brewery would have to pick up the beer and deliver it, or pay someone else to do so. Again, this restriction features no public health or safety benefit.

The bill also prohibits nano breweries and brew pubs from reducing their on-site output when they contract with another brewer. In other words, contracting can be done only to increase total production, not to replace any portion of existing production.

So if a brew pub or nano brewery contracts with another brewer to expand production, it had better not have an accident, owner illness or any other misfortune that causes on-site production to drop. That would put it in violation of the law. 

Protectionism’s broader impact

When legislators belatedly passed laws that allowed Granite Staters to start small breweries and brew pubs (which were already flourishing in other states), they imposed thick layers of regulations, many of which protected other industries that were afraid of the competition. SB 125 addresses only a few of these. 

Largely because of legal barriers, New Hampshire’s craft brewing industry lags far behind many other states, including the People’s Republic of Vermont.

Vermont, of all places, relaxed some of its beer manufacturing restrictions in the 1980s, sparking the growth of an industry. It has 77 craft breweries compared to New Hampshire’s 93, according to data kept by the national Brewers Association. But with less than half of New Hampshire’s population, Vermont has 15.4 craft breweries per 100,000 people over age 21 vs. 8.8 for New Hampshire. 

In craft brewing circles, Vermont is legendary. It was an early adopter of craft brewing. New Hampshire has played catch up with Vermont for years.

Maine, which has slightly fewer people than New Hampshire, has 136 craft breweries (43 more than New Hampshire), or 12.9 per 100,000 people over age 21.

Brewers in both Vermont and Maine have fought protectionist and prohibitionist laws. But in at least some cases those laws were loosened earlier there than in the “Live free or die” state.  

For years, New Hampshire’s overly restrictive laws have needlessly hindered the growth of the local craft brewing industry. Most of those restrictions are pure protectionism for other industries. 

Legislators deliberately handicapped craft breweries to protect restaurants, retailers and beer distributors. Those protections have made it harder than necessary for New Hampshire brewers to grow and to reach consumers. 

One consequence is that Portland, Maine, and all of Vermont are better known as craft beer destinations than New Hampshire, though the Granite State has some excellent and award-winning breweries. By restricting the growth of one industry, protectionist laws have given our neighboring states a small but noteworthy competitive advantage in both tourism promotion and the recruitment of young professionals. 

Laws should favor free and open competition, not one industry over another. The laws that regulate New Hampshire craft breweries ought to facilitate innovation, creativity, experimentation and economic growth. Too often, they do the opposite. 

Better laws will better serve communities and consumers. They’ll lead to more business growth, more jobs, a higher quality of life… and more great beer. 

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Over-regulating small businesses, cigar bar edition

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One of the consequences of regulating business by statute is that statutes are categorized, and therefore businesses have to be categorized too. The rigid legal classifications for businesses can lead to some restrictions that make sense only to lawyers, legislators, and scientists who catalogue animal and plant species.

The first step in regulating a business is to define it. Is it a restaurant, a brew pub, a cocktail lounge? Each of those falls under a separate definition and is governed by separate regulations. A business may not float between categories.

So, for example, state law divides breweries into multiple categories. There are beverage manufacturers, nano breweries, tenant breweries and brew pubs. If a nano brewery makes more than 2,000 barrels a year, it can’t be a nano brewery anymore. One additional barrel of beer puts it in a separate legal category with separate regulations. 

Cigar bars have their own section in the law. When legislators allowed cigar shops to sell alcohol, they decided they could no longer call them cigar shops. So they had to define “cigar bar” in the law and create a new section for it. 

By definition, a cigar bar has to generate at least 60% of its quarterly gross revenue from the sale of cigars and cigar-related products (those are defined in law), have a humidor on the premises, not allow anyone under age 21 on the premises, not allow cigarette smoking, not allow outside alcoholic beverages, and not serve food. 

Wait, not serve food?

Full-service restaurants are prohibited from operating cocktail lounges (bars) on days when their dining rooms are closed. But cigar bars are forced by law to serve alcohol without food. 

What in the world?

Well, if cigar bars serve food, then people might start to think of cigar bars as restaurants. If people think cigar bars are restaurants, it might occur to them to go to a cigar bar, rather than a restaurant, for dinner. 

And if business regulations exist for any purpose, it’s to prevent a new type of business from competing with an established business for customers. 

So — by law — cigar bars may serve their customers alcohol, but may not provide any food whatsoever to help slow the alcohol absorption. Not even free bar peanuts. 

Never mind that drinking on an empty stomach causes the body to absorb alcohol faster. 

The first to recognize the problem caused by this law was not legislators, but… cigar bar owners. (Who would have guessed?)

They tried in the last legislative session to get this legal prohibition on serving food to cigar aficionados repealed, but COVID speeded the end of the session before the bill, which passed the House and had a unanimous thumb’s up from the Senate Commerce Committee, could pass. 

This week, a bill to end this prohibition, House Bill 171, was taken up by the Senate Commerce Committee again after passing the House last week. It received a 5-0 ought-to-pass recommendation. 

One reason the bill has a good chance of becoming law is because it doesn’t upset restaurant owners. It doesn’t upset them because it would not end the ban on cigar bars competing with restaurants.

Legislators can be clever when they want to be. The bill would strike the word “service” from current law and replace it with “sale.” 

That way, cigar bars could put out free pretzels or nuts, but couldn’t sell food, so they technically wouldn’t have to be classified as restaurants — and wouldn’t compete with restaurants. 

See how it works?

Of course, cigar bars won’t be able sell candy bars or cupcakes or packaged snack foods either. They have to take a loss on any food they serve. Selling even pre-packaged food might put them into competition with convenience stores or bakeries, just as selling hot food would put them into competition with restaurants. 

And if there’s one thing the state absolutely must avoid, it’s different types of businesses competing with each other to satisfy consumer demand.

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State study: A $15 minimum wage would make N.H. poorer, less populous

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Raising New Hampshire’s minimum wage to $15 an hour would cost the state nearly 6,000 jobs and more than 9,000 residents, raise consumer prices, reduce economic output, and cause serious harm to small businesses and the leisure and hospitality industries, a new report from New Hampshire Employment Security concludes.  

The study, released Monday by the Labor Market Information Bureau, examined in detail how a minimum wage increase would affect employers and employees in the state, across all industries. It projected the impact of raising the minimum from $7.25 an hour to $9.50, then $12, then $15 by 2026. 

The findings show that, although some lower-wage employees would experience an increase in earnings, the overall economic impact on the state would be negative.

Among the report’s findings:

  • New Hampshire’s gross domestic product will be more than $800 million lower by 2031 than it would have been without a $15.00 minimum wage.
  • The state’s population will be 9,630 lower and its labor force will include 6,023 fewer individuals in response to a $15.00 minimum wage and the resulting diminished employment opportunities in the state.
  • Increases in personal income over the baseline forecast will peak at $873 million in the year the minimum wage reaches $15.00 but will decline in subsequent years in response to employment losses. The increase in personal income will, however, remain positive, and be $228 million above baseline forecast by 2031.
  • Workers in the lowest wage categories will see the largest increases in income but also experience the highest number of job losses in response to a $15.00 minimum wage.
  • Industries such as food services and drinking places, and other leisure and hospitality industries, as well as retail trade, are forecast to experience the largest job losses. These reductions in employment offset much of the benefits of increased wages for low-wage workers in those industries.
  • Aggregate price levels will increase by less than one percent across the New Hampshire economy in response to the $15.00 minimum wage, but specific industries most affected by the increase, such as the food services and drinking places industry (+7.0%), and the retail industry (+3.4%) will see substantial price increases.

Wage costs would hit some industries much harder than others, the report finds. Wage costs would rise by 1.4% in manufacturing, but 10.8% in accommodations, 18.6% in leisure and hospitality, and 20.1% in food service and drinking places.

On the economy as a whole, the study finds that “GDP will be lower in New Hampshire as a result of a $15.00 minimum wage than it would have been without the minimum wage increase, by approximately $806 million dollars by the end of the forecast period in 2031.”

If the state adopts a $15 minimum wage, the study predicts that over the next decade retail prices would increase by 2.41%, accommodations prices by 3.14% and food service & drinking places prices by 6.86%.

The report also warns that a $15 minimum wage would reduce teen employment, which could have a broad cultural and economic impact in New Hampshire.

“New Hampshire has traditionally had among the highest percentage of teenage and youth under the age of 22 participating in the labor force of any state in the nation. Opportunities for work for young people help teach solid work habits at an early age and have been important in developing New Hampshire’s reputation for having a high-quality workforce. A high minimum wage will reduce employment opportunities for youth, exacerbating trends in the decline of the youth labor force and further disadvantaging industries that are already most affected by the minimum wage hike (food services, retail, recreation) that rely on youth labor.”

The report finds that “the negative job impacts resulting from a minimum wage increase are concentrated in the lowest wage occupations, precisely the occupations that a minimum wage increase is designed to benefit.”

Furthermore, job losses for the poorest fifth of the population would not be distributed evenly throughout the state. Grafton, Coos, Rockingham and Carroll counties would experience larger job losses among their lowest-income residents, the study found.

Overall, the study concludes that raising New Hampshire’s minimum wage to $15 an hour would make the state poorer and less populous than it would have been without the minimum wage increase. Those are results lawmakers should strive to avoid, not achieve.

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New Hampshire starts 2021 with a severe housing shortage

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It’s the heart of winter, and home sales in New Hampshire are hotter than a leprechaun on a Lucky Charms-fueled bender in Vegas. 

December typically is a slow home sales month, for obvious reasons. But in December, 2020, sales were up 25% over December, 2019, and sales volume was up 49%, according to data tracked by the New Hampshire Association of Realtors. 

A home spends an average of only 33 days on the market in New Hampshire, down 47.6% from the previous December. And the median sales price hit $349,900, up 16%.

In December of 2019, housing experts were concerned because the median home price rose to $299.999, just a dollar shy of $300,000. In a year, the median price rose by nearly $50.000.

And that price increase happened as new listings rose by 30%. People couldn’t put houses on the market quickly enough to meet demand. There was 2.4 months’ worth of supply in the housing market in December of 2019. A year later, that was down to 0.9 months.

Just five years ago, the median home price in New Hampshire was $249,800, fully $100,000 less than today’s median. 

Although urban coronavirus refugees pushed demand even higher in 2020, it was far outstripping supply long before the pandemic hit.

A state report issued in December noted that even though 2019 was the sixth year in a row to experience a growth in the number of housing units permitted by local governments, “the level of building activity continues to be less than half of the level at its peak in the early 2000s.”

Housing totals illustrate how slow the pace of new construction has been.

Hillsborough County, home to the state’s two largest cities, had 166,050 total housing units (single-family, multi-family, and manufactured) in 2010. In 2019, it had 174,824, an increase of only 8,774, or about 5.3%. 

Statewide, total housing units rose from 614,238 in 2010 to 646,889 in 2019, an increase of 32,651, or just 5.3%. 

For contrast, the U.S. Census Bureau measured the change in housing units from April, 2010 to July, 2019 (so the time frame is different from the state’s by a few months). The Census figures show the total number of housing units nationwide rising by 6.1% from 2010-2019. The increase in New Hampshire was only 4.5%, by the Census’ count.

Rental housing is also in short supply, suffering from a severe shortage of new construction. The good news in 2020 was that the vacancy rate roughly doubled. The bad news is that it was below 1% last year and rose to only 1.8% this year. 

A healthy rental vacancy rate is considered to be 5%. New Hampshire last had a vacancy rate above 5% in 2009 — during the recession. Rents rise every year, driven largely by the extreme shortage of units, especially in places that are experiencing stronger economic growth. 

Legislators have introduced several bills to try to address the problem. But many of the bills focus on incentives and subsidies, as if developers need prodding from the Legislature to get rich selling homes people are clamoring to buy. 

The best way to get more housing is to reduce local government restrictions on the construction of new housing. Until that is done, anything else is just window dressing. Really, really expensive window dressing.

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New Hampshire must avoid another coronavirus crash

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This week, New Hampshire’s initial unemployment claims fell below 2,000 for the first time since March. And the state’s positive PCR coronavirus test rate edged up past 1% for the first time since the state started increasing its testing and calculating the percent-positive rate late this summer. Whether the state can keep the former trend going depends on how the latter is handled. 

It’s hard to overstate the importance of keeping the economy from sliding back into a recession. Contrary to the sentiments of delusional anti-capitalists who blithely assert that the economy can be sacrificed indefinitely for the purpose of crushing the virus, a thriving economy is a tremendous social good and ought to be a top governmental priority. 

When profits evaporate, so do jobs. When jobs evaporate, people suffer, especially those in the most vulnerable financial positions. 

As the National Institutes of Health has documented, people who lose their jobs suffer from higher stress and more medical ailments. As the Urban Institute documented after the last great recession:

“Being out of work for six months or more is associated with lower well-being among the long- term unemployed, their families, and their communities. Each week out of work means more lost income. The long-term unemployed also tend to earn less once they find new jobs. They tend to be in poorer health and have children with worse academic performance than similar workers who avoided unemployment. Communities with a higher share of long-term unemployed workers also tend to have higher rates of crime and violence.” 

Before the coronavirus hit New Hampshire, weekly unemployment claims were consistently below 1,000 per week. The state’s economy was an employment machine, allowing Granite Staters, both blue and white collar, to enjoy the dignity of work and self-sufficiency.

The lockdown caused unemployment claims to spike from 642 to 29,379 in a single week. Claims surpassed 30,000 for the next two weeks before starting to decline in April. As the economy slowly opened, unemployment claims fell and are now just under triple their pre-pandemic level (1,880 this week vs. 642 the week of March 14).

Some economic sectors remain in dire circumstances (think hospitality), but the economy as a whole has clawed its way back throughout the summer and is well positioned to continue growing. Locking down the economy again would be an economic and humanitarian disaster. 

In the second quarter, New Hampshire’s GDP declined by 36.9%. Another economic hit even close to that would devastate not just the state’s employers, but its non-profits, local governments, and the state budget. 

Businesses make the economy run, and the economy includes non-profits and government. Business profits make it possible for people to pay their mortgages and grocery bills, but also to pay their property taxes, donate to non-profits and churches, and generate the revenue that keeps schools open, roads maintained, and social services funded. 

Business taxes make up the largest single source of revenue for the state budget, accounting for $805.6 million of the state’s $2.6 billion in general and education fund revenue in 2019. The next-largest source, excluding property taxes retained locally, is the rooms and meals tax at $350.1 million. And of course strong rooms and meals tax revenue depends on a healthy hospitality industry. 

Other major taxes — the interest and dividends tax, the insurance tax, the communications tax, the tobacco tax — all depend on businesses to be successful and profitable. Even state liquor sales are business-dependent. The state doesn’t make liquor. It sells liquor and wine made by the private sector. 

Keeping the economy from collapsing again is mission critical for New Hampshire’s employers and for state and local governments. That’s why the governor’s order this week requiring restaurants to collect contact information from patrons was an encouraging sign. 

After several COVID-19 clusters associated with restaurants, the governor could have ordered restaurants closed, as some European countries are doing. Instead, at the request of the New Hampshire Restaurant Association, the governor ordered contact tracing. 

The goal of the order is two-fold. One, it reduces, if not ends, the state alerts that ask people who patronized a cluster-associated restaurant to come forward. Those alerts cause alarm and discourage people from going out to eat. They hurt all restaurants, which hurts the entire industry, making it more likely that struggling restaurants will close permanently. They also hurt the state budget by reducing rooms and meals tax revenue. 

Two, the order allows for quicker contact tracing, which can curtail the spread of the virus, helping to avoid other clusters or outbreaks. That, in turn, helps keep the broader economy open. 

COVID-19 infections, hospitalizations and deaths are expected to continue rising this fall and winter. The state’s response must not be a broad economic shutdown. They are devastating, and if Europe is an indication they are likely to be ineffective as people revolt against their restrictions. If another lockdown is to be avoided, the state and the people have to focus on suppressing clusters and outbreaks. 

The state can do only so much if people don’t take responsibility for their own behavior. As with most any other government intrusion in the name of public health, safety or welfare, if individuals decide to do their share, there will be less for the government to do on their behalf.

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The minimum wage, again?

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Like a good horror movie villain that just won’t die, the minimum wage has risen again. It reemerged in the presidential debate on October 21, and the same legislator who introduced the $15 minimum wage bill vetoed this year by Gov. Chris Sununu has filed another minimum wage bill for next year. 

In the presidential debate, the moderator surprisingly acknowledged the cost of higher minimum wages in her question to former Vice President Joe Biden.

“We are talking a lot about struggling small businesses and business owners these days. Do you think this is the right time to ask them to raise the minimum wage or support a federal $15 minimum wage?”

That was a good framing of the question. Biden gave a confusing answer. 

“I do,” Biden said. “Because I think that one of the things we’re going to have to do is we’re going to have to bail them out too. We should be bailing them out now, those small businesses. You’ve got one in six of them going under. They’re not going to be able to make it back.”

It’s unclear how “bailing out” businesses relates to the minimum wage, unless Biden meant that the federal government is already spending money to keep businesses alive so it might as well spend more to keep alive those that would be harmed by a federal $15 minimum wage law.

Biden went on to say, in response to an assertion from President Trump, “there is no evidence that when you raise the minimum wage business go out of business. That is simply not true.”

Ah, but it is true. 

A 2017 Harvard Business School study found that higher minimum wages result in restaurant closures.   

A 2018 U.S. Census Bureau study of manufacturers over 23 years found that “when wage rates increase, establishments are more likely to exit the market.” It also found that increases in the minimum wage led to reduction in hours worked and increases in automation. 

A 2019 National Bureau of Economic Research study found that “increases in the federal minimum wage worsen the financial health of small businesses in the affected states.… Increases in the minimum wage also lead to lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate for small businesses.”

The theory behind the minimum wage is that greedy capitalists sitting on piles of cash are exploiting workers and therefore must be forced to share their wealth. In reality, businesses fight to survive in highly competitive markets, and artificial wage floors often hurt both the businesses and the people they were intended to help. 

A 2019 UC-Irvine study found that minimum wage increases caused slower employment growth in California’s restaurant industry, with significantly larger effects in low-income neighborhoods.

The Congressional Budget Office just last year concluded that “the net effect of a minimum-wage increase is to reduce average family income” because “workers lose their jobs and business owners must absorb at least some of the higher costs of labor.”

It further concluded that higher minimum wages increase unemployment. “By increasing the cost of employing low-wage workers, a higher minimum wage generally leads employers to reduce the size of their workforce.”

The question to Biden from ABC News debate moderator Kristen Welker got the issue right. Minimum wage increases do strain small businesses, and that strain would be even more acute as businesses struggle with revenue losses caused by the pandemic and government restrictions on economic activity. 

The service industry has taken a financial beating during the pandemic. It’s a major reason for what Biden and others have called the K-shaped recovery. As the economy has picked back up, employment has lagged in sectors that employ a lot of lower-wage workers, such as restaurants. Among the hardest-hit businesses during the pandemic have been restaurants and movie theaters, both of which pay many employees at or near the minimum wage. 

If politicians want to guarantee larger-scale restaurant and theater closures, and permanent job losses for many in the service sector who have endured temporary unemployment during 2020, a $15 minimum wage would do the trick. 

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N.H. is running out of places for our families, friends & coworkers to live

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The No. 1 reason people move to or stay in New Hampshire is not jobs or low taxes or the environment. It’s family, according to University of New Hampshire Granite State Poll results summarized in the New Hampshire Housing Finance Authority’s October Housing Market Report. 

New Hampshire’s strong economy gives our extended family members plenty of options for employment should they decide to stay or return home. Maintaining a vibrant economy is a way of keeping our families connected and close. But the other essential part of this equation is missing — where are they going to live? 

The coronavirus pandemic has made New Hampshire’s acute housing shortage even worse, data from the New Hampshire Housing Finance Authority (NHFA) show. 

Multiple news organizations have documented the run on houses in New Hampshire, Vermont and Maine as people flee cities for the safety of rural and suburban spaces with low infection rates. That surge in purchasers has spiked New Hampshire’s already high demand, driving prices to record levels. 

New Hampshire’s median home price reached a new peak of $335,000 in August, a 14% increase since last August, NHFA tracking shows. Sales are down 6% since January. Those numbers “reflect extremely low inventory levels, not a lack of demand,” the NHFA concludes.

“September 2020 listings in total have dropped 27% when compared to September 2019. As prices continue to rise, listings under $300,000 become scarcer; the number of homes below this price have decreased 37% from last year,” the authority’s October report details.

In September, there was less than a month’s supply of homes priced under $300,000 in the entire state. 

To put it another way, your child who wants to move home from Boston or Raleigh or Silicon Valley might have to keep that big-city salary just to afford a house in New Hampshire. 

The housing shortage is tighter this fall even though building permits for single-family homes rose by 24% from January through August. New Hampshire’s housing stock is so low that it will be years before we come close to building enough homes to satisfy demand. 

For rentals, the picture is even worse. Building permits for multi-family homes fell by 61% from January through August. As demand has surged, communities have clamped down on new apartment construction (or builders have given up even applying). 

For example, Bedford’s planning board in September rejected a proposal to build 200 market-rate luxury apartments in the town’s commercial zone on South River Road. Though the apartments would have brought more tax revenue and less traffic than a commercial development previously approved for the same lot, and would have made the town a profit after school and public safety costs were deducted, the board rejected it. Board members didn’t want more apartments, even though the data showed that apartments would have left the town financially better off than commercial development.  

Because local regulators continue to artificially restrict the supply of rental housing, rents keep rising. The median monthly rent for a two-bedroom apartment in New Hampshire rose 4.9% in the past year, to $1,413, NHFA data show. The state’s rental vacancy rate has risen a bit but remains below 2%. 

All of this means that if your children and parents want to move back to town, they will struggle to find a home. 

The NHFA’s report shows that almost three-fourths (73%) of New Hampshire home buyers are Granite Staters moving to another home within the state. High prices inflated by a severe shortage of new construction do not primarily hurt out-of-staters who want to move here for jobs. They primarily hurt Granite Staters. 

They also hurt New Hampshire employers. Fidelity and Sig Sauer this week announced expansions that would create more than 700 new jobs in the state. The shortage of housing in Southern New Hampshire will make it harder for those companies to fill those positions.  

New Hampshire’s families, workers and employers are in desperate need of new home construction, both owner-occupied and rentals. The situation has been worsening for years. At what point do all three go to their local boards and demand that they get out of the way and let builders build?

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